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304.7-417 Foreign investments and foreign currency transactions.
(1)
(2)
(3)
Subject to the limitations of KRS 304.7-403, an insurer may acquire foreign
investments, or engage in investment practices with persons of or in foreign
jurisdictions, of substantially the same types as those that an insurer is
permitted to acquire under this subtitle, other than of the type permitted under
KRS 304.7-407, if, as a result of and after giving effect to the investment:
(a) The aggregate amount of foreign investments then held by the insurer
under this subsection does not exceed twenty percent (20%) of its
admitted assets; and
(b) The aggregate amount of foreign investments then held by the insurer
under this subsection in a single foreign jurisdiction does not exceed ten
percent (10%) of its admitted assets as to a foreign jurisdiction that has a
sovereign debt rating of SVO 1 or three percent (3%) of its admitted
assets as to any other foreign jurisdiction.
Subject to the limitations of KRS 304.7-403, an insurer may acquire
investments, or engage in investment practices denominated in foreign
currencies, whether or not they are foreign investments acquired under
subsection (1) of this section, or additional foreign currency exposure as a
result of the termination or expiration of a hedging transaction with respect to
investments denominated in a foreign currency, if:
(a) The aggregate amount of investments then held by the insurer under this
subsection denominated in foreign currencies does not exceed ten
percent (10%) of its admitted assets; and
(b) The aggregate amount of investments then held by the insurer under this
subsection denominated in the foreign currency of a single foreign
jurisdiction does not exceed ten percent (10%) of its admitted assets as to
a foreign jurisdiction that has a sovereign debt rating of SVO 1 or three
percent (3%) of its admitted assets as to any other foreign jurisdiction;
(c) However, an investment shall not be considered denominated in a foreign
currency if the acquiring insurer enters into one (1) or more contracts in
transactions permitted under KRS 304.7-419 and the business entity
counterparty agrees under the contract or contracts to exchange all
payments made on the foreign currency denominated investment for
United States currency at a rate that effectively insulates the investment
cash flows against future changes in currency exchange rates during the
period the contract or contracts are in effect.
In addition to investments permitted under subsections (1) and (2) of this
section, an insurer that is authorized to do business in a foreign jurisdiction,
and that has outstanding insurance, annuity, or reinsurance contracts on lives
or risks resident or located in that foreign jurisdiction and denominated in
foreign currency of that jurisdiction, may acquire foreign investment respecting
that foreign jurisdiction, and may acquire investments denominated in the
currency of that jurisdiction, subject to the limitations of KRS 304.7-403.
However, investments made under this subsection in obligations of foreign
governments, their political subdivisions, and government sponsored
enterprises shall not be subject to the limitations of KRS 304.7-407 if those
investments carry an SVO rating of 1 or 2. The aggregate amount of
(4)
(5)
investments acquired by the insurer under this subsection shall not exceed the
greater of:
(a) The amount the insurer is required by the law of the foreign jurisdiction to
invest in the foreign jurisdiction; or
(b) One hundred fifteen percent (115%) of the amount of its reserves, net of
reinsurance, and other obligations under the contracts on lives or risks
resident or located in the foreign jurisdiction.
In addition to investments permitted under subsections (1) and (2) of this
section, an insurer that is not authorized to do business in a foreign jurisdiction,
but that has outstanding insurance, annuity, or reinsurance contracts on lives
or risks resident or located in that foreign jurisdiction and denominated in
foreign currency of that jurisdiction, may acquire foreign investments respecting
that foreign jurisdiction, and may acquire investments denominated in the
currency of that jurisdiction subject to the limitations of KRS 304.7-403.
However, investments made under this subsection in obligations of foreign
governments, their political subdivisions, and government sponsored
enterprises shall not be subject to the limitations of KRS 304.7-403 if those
investments carry an SVO rating of 1 or 2. The aggregate amount of
investments acquired by the insurer under this subsection shall not exceed one
hundred five percent (105%) of the amount of its reserves, net of reinsurance,
and other obligations under the contracts on lives or risks resident or located in
the foreign jurisdiction.
Investments acquired under this section shall be aggregated with investments
of the same types made in accordance with this subtitle, and in a similar
manner, for purposes of determining compliance with the limitations, if any,
contained in this subtitle. Investments in obligations of foreign governments,
their political subdivisions, and government sponsored enterprises of these
persons, except for those exempted under subsections (3) and (4) of this
section, shall be subject to the limitations of KRS 304.7-403.
Effective:July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 15, effective July 14, 2000.
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